East of Suez Market Update 22 May

Prices in East of Suez ports have moved in mixed directions, and availability of all grades is tight in Fujairah.

IMAGE: Bunker barge at berth in Fujairah, UAE. Port of Fujairah

Changes on the day to 17.00 SGT (09.00 GMT) today:

• VLSFO prices up in Fujairah ($6/mt), and down in Singapore ($14/mt) and Zhoushan ($1/mt)
• LSMGO prices up in Zhoushan ($10/mt), and down in Fujairah ($48/mt) and Singapore ($13/mt)
• HSFO prices in up Singapore ($22/mt) and Fujairah ($12/mt), and down in Zhoushan ($19/mt)
• B30-VLSFO price steady in Singapore

Fujairah’s VLSFO price has risen over the past day, while prices in Singapore and Zhoushan have edged lower. As a result, Fujairah’s VLSFO now commands significant premiums of $103/mt over Singapore and $101/mt over Zhoushan.

In Fujairah, bunker availability continues to remain tight, with all offers subject to firm enquiry. Demand has fallen sharply as many vessels are still awaiting transit through the Strait of Hormuz. Some suppliers continue to hold product in the port, while others have exhausted stocks as imports have nearly come to a standstill, according to a trader.

“Supplies taking place as normal and some terminals remain closed for maintenance,” the trader added.

“Operations [in Saudi Arabia] are continuing normally, although intermittent congestion is causing some delivery delays,” a source said.

No official alerts have been issued in Saudi Arabia so far. In Jeddah, VLSFO availability remains constrained, whereas LSMGO supply is steady.

Meanwhile, both VLSFO and LSMGO continue to face tight supply conditions at the port of Djibouti.

Brent

The front-month ICE Brent contract has gained by $0.83/bbl on the day, to trade at $105.81/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent’s price is poised to end the week above $100/bbl, following reports that Iran’s new Supreme Leader remains unwilling to abandon the country’s uranium enrichment program, a major sticking point in efforts to secure a peace deal.

Mojtaba Khamenei, Iran’s new hardline Supreme Leader, has issued an order for uranium-powered weapons to remain within Iran, Reuters reported.

The news comes days after US President Donald Trump said Tehran will not be allowed to continue uranium enrichment under the peace deal.

The conflict in interest is expected to complicate the fragile peace deal between the US and Iran – further adding upward pressure on oil prices, market analysts said.

“The issues at stake remain the location of Iran’s uranium stockpile and control over the Strait of Hormuz,” ANZ Bank’s senior commodity strategist Daniel Hynes said.

Downward pressure:

While there are no significant downward pressures on Brent’s price today, market participants will be focused on any suggestions of progress in US-Iran negotiations.

Washington is in the “final stages” of the ongoing negotiations with Tehran, Reuters reported citing Trump.

“Speculation is mounting about a peace deal between the US and Iran. Both sides have signalled progress in recent talks,” Hynes said.

By Tuhin Roy and Aparupa Mazumder

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